October 2019 Newsletter

After such an extended Summer for many across the country, Fall has finally made its way in and the leaves are changing, temperatures are milder, and the holidays are fast-approaching. And makes for perfect time to show all the amenities of your community.

The 2020s are just around the corner and as our conference theme predicts “The Roaring 20s Returns” and we’ll be “Recruiting Retirees in a New Decade.” Here are some of the exciting presentations being offered by this year’s line-up of speakers: How to Win More Sales Through All Seasons, What Marketing and Retirement Have in Common, Trends Affecting Travel and Retirement Decision-Making, and Marketing to Baby Boomers One More Time. These topics and many more will be presented during our two days of learning and fellowship together.

The AARC prides itself on providing formative resources for our members and to help reach potential retirees and visitors with as much information to make an informed decision on their next step in life. We hope to see you in Chattanooga very soon!

Sincerely,

Rachel Baker Chair, The AARC

Annual Conference with 5 National Speakers plus Many More!

Roaring 20s Returns….Recruiting Retirees in a New Decade

Chattanooga, Tennessee – November 6th – 8th, 2019

We have seen tremendous response and sign-ups for this year’s conference and attendees and presenters alike are excited the annual conference is finally here.

The AARC Annual Conference is pouring new energy and ideas into the retiree community industry.

This year’s heavy-hitting line up includes:

How To Win More Sales Through All SeasonsJason Forrest & Mary Marshall, Forrest Performance Group

Learn from 5 headlining speakers plus a robust line-up of many industry experts who will speak, teach and inspire.

See you next week in Chattanooga!

If you missed out on the 2019 Annual Conference stayed tuned for information coming soon about 2020!

Existing-Home Sales Decreased 2.2% in September

National Association of Realtors | October 22, 2019

Lawrence Yun, National Association of Realtors

WASHINGTON (October 22, 2019) – Existing-home sales receded in September following two consecutive months of increases, according to the National Association of Realtors®. Each of the four major regions witnessed sales drop off last month, with the Midwest absorbing the brunt of those declines.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 2.2% from August to a seasonally adjusted annual rate of 5.38 million in September. Despite the decline, overall sales are up 3.9% from a year ago (5.18 million in September 2018).

Lawrence Yun, NAR’s chief economist, said that despite historically low mortgage rates, sales have not commensurately increased, in part due to a low level of new housing options. “We must continue to beat the drum for more inventory,” said Yun, who has called for additional home construction for over a year. “Home prices are rising too rapidly because of the housing shortage, and this lack of inventory is preventing home sales growth potential.”

The median existing-home price2 for all housing types in September was $272,100, up 5.9% from September 2018 ($256,900), as prices rose in all regions. September’s price increase marks 91 straight months of year-over-year gains.

Total housing inventory3 at the end of September sat at 1.83 million, approximately equal to the amount of existing-homes available for sale in August, but a 2.7% decrease from 1.88 million one year ago. Unsold inventory is at a 4.1-month supply at the current sales pace, up from 4.0 months in August and down from the 4.4-month figure recorded in September 2018.

Properties typically remained on the market for 32 days in September, up from 31 days in August and even with September 2018. Forty-nine percent of homes sold in September 2019 were on the market for less than a month.

First-time buyers were responsible for 33% of sales in September, up from 31% in August and 32% recorded in September 2018. NAR’s 2018 Profile of Home Buyers and Sellers – released in late 20184 – revealed that the annual share of first-time buyers was 33%.

As the share of first-time buyers rose, individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in September 2019, unchanged from August but down from 16% recorded last September. All-cash sales accounted for 17% of transactions in September, down from 19% in August and 21% in September 2018.

Distressed sales5 – foreclosures and short sales – represented 2% of sales in September, unchanged from August but down from 3% in September 2018.

“For families on the sidelines thinking about buying a home, current rates are making the climate extremely favorable in markets across the country,” said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota, and broker at Edina Realty. “These traditionally low rates make it that much easier to qualify for a mortgage, and they also open up various housing selections to buyers everywhere.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.61% in September, down from 3.62% in August. The average commitment rate across all of 2018 was 4.54%.

“Mortgage rates under 4% are amazingly attractive for homebuyers,” said Yun. “The rise in foot traffic as evidenced by the open rates of SentriLock key boxes shows growing buyer interest.”

Single-family and Condo/Co-op Sales

Single-family home sales sat at a seasonally adjusted annual rate of 4.78 million in September, down from 4.91 million in August, but up 3.9% from a year ago. The median existing single-family home price was $275,100 in September 2019, up 6.1% from September 2018.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 600,000 units in September, 1.7% above the previous month and 3.4% higher than a year ago. The median existing condo price was $248,600 in September, which is an increase of 4.5% from a year ago.

Regional Breakdown

As noted, existing-home sales in September dropped in every region compared to the month prior. Compared to last year, September sales increased in three of the four major regions, while neither growing nor declining in the Midwest. Median home prices in every region increased from one year ago.

September existing-home sales in the Northeast fell 2.8% to an annual rate of 690,000, a 1.5% rise from a year ago. The median price in the Northeast was $301,100, up 5.2% from September 2018.

In the Midwest, existing-home sales dropped 3.1% to an annual rate of 1.27 million, which is nearly equal to August 2018. The median price in the Midwest was $213,500, a 7.2% jump from a year ago.

Existing-home sales in the South decreased 2.1% to an annual rate of 2.28 million in September, up 6.0% from a year ago. The median price in the South was $237,300, up 6.3% from one year ago.

Existing-home sales in the West declined 0.9% to an annual rate of 1.14 million in September, 5.6% above a year ago. The median price in the West was $403,600, up 4.5% from September 2018.

The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

2020 Housing Market: What the Experts Think

Suzanne De Vita, RISMedia

Balance.

Everyone felt it at the start of the year—conditions leveling, the market yin and yanging. About half of Power Brokers sensed it, too—that the current cycle’s ending, and a different dynamic’s emerging.

Now, with two months left in 2019, the consensus is similar…but certain factors remain unclear.

“The housing market is in the midst of a normalization period, one that is characterized by slowing price growth, moderate sales and new supply that is slow to market,” according to Ralph McLaughlin, deputy chief economist and executive of Research and Insights at CoreLogic, a data provider.

As the cycle turns, the correction is naturally progressing, Eli Beracha, PhD, director of Florida International University’s Hollo School of Real Estate, says.

“We are toward the end of the cycle—but I do not see a collapse coming, or even a strong correction,” Beracha explains.

Beracha, along with Bill Hardin and Ken Johnson, of FIU and Florida Atlantic University, respectively, developed the Beracha, Hardin and Johnson Buy vs. Rent Index, which assesses whether it’s better to buy or rent.

“Our BH&J scores are starting to soften, and that historically happens as prices start to turn over,” Johnson, a real estate economist, says. “I do not foresee a crash like we had—we have a lot of good economic news that’s helping the housing market buffer itself against a significant contraction in prices.”

That’s the good news.

Appreciation’s been easing for some time, according to the Case-Shiller/CoreLogic Indices. In the latest update, annual appreciation edged just over 3 percent, down by half, roughly, year-over-year.

There are, however, indicators of a resurgence, explains Matthew Speakman, economist at Zillow. The portal publishes the Zillow Home Value Index, based on Zestimates.

“Annual home value appreciation continues to fall, but recent trends suggest that a reacceleration is likely in the coming months,” says Speakman, who adds that the change in course is expected “only marginally,” and to “remain near [the] current 4 percent annual growth pace.”

For 2020, the annual appreciation estimates vary, but generally lie in the 2-5 percent range. In one scenario, the Urban Land Institute makes moderate projections: 2.5 percent in 2020 and 3 percent in 2021. Of existing for-sale homes—or preowned stock—the median price is $278,200, up 4.7 percent, according to National Association of REALTORS® numbers. For newly-built properties, it’s steeper, at $328,400, according to Census data.

“Price appreciation for the next 12 months is more in the 3-5 percent range,” Lawrence Yun, chief economist at NAR, says. “I don’t see any risk of a price decline.”

“I expect prices to go flat—1-2 percent, even 3 percent, is going to become the norm,” Johnson says.

Earlier this month, CoreLogic’s Home Price Index—different from the Case-Shiller report—foundovervalued prices in 37 percent of the largest markets in the nation.

“Right now, we’re expecting home price growth to recover somewhat from the 16-month cooling period it just went through and to settle out around 4-5 percent year-over-year by next fall,” McLaughlin says.

What about the price-pusher—supply? According to Census figures from September, construction fell month-over-month more than 9 percent, but still came out 1.6 percent ahead of the previous year. The ULI is predicting 850,000 single-family starts this year, 810,000 single-family starts in 2020 and 800,000 single-family starts in 2021, compared to 875,800 last year. Across all housing types, NAR is expecting 2 percent more starts in 2019 and 10.6 percent more starts in 2020.

“Builders are steadily building more, but even a 50 percent increase from current construction activity, the market will be able to absorb,” Yun says. “We need a strong ramp-up in construction, but, more likely, it will be more of a steady increase. There will still be a housing shortage at the mid-price [tier] and lower.”

That’s not to say builder confidence is lacking, or there aren’t affordable homes being built. In fact, the National Association of Home Builders confidence reading surged this week.

“Home builders appear to be increasingly focused on entry-level homes, as the median square footage of new single-family construction fell 4.3 percent in the second quarter,” Doug Duncan, chief economist at Fannie Mae, pointed out in a separate update.

Then there’s interest rates, which are currently at lows, and aren’t expected to move much in 2020. In a forecast from the ULI, the 10-year Treasury rate—correlated to fixed mortgage rates—rises in 2020 and 2021, but only slightly.

“There’s just no evidence that there’s going to be upward pressure on rates any time soon,” Johnson says. “As long as we have a positive slope to the yield curve, as long as we have a stable economy, I don’t see many interest rate increases.”

Beracha confirms rates “may go half a percent in either direction, but I don’t see them [rising substantially] in the next year,” adding “the [Federal Reserve] decreased interest rates twice in the last couple of months—I don’t think we’re going to see much more of that.”

“Barring a significant, positive development in the U.S.-China trade discussions, Brexit, or other significant current geopolitical dilemma, I imagine that mortgage rates will remain near their current, multi-year lows” in the near term, says Speakman.

Buoyed by low rates, 2020 home sales should tick up, according to Yun. As of last month, NAR forecasted 0.6 percent more home sales in 2019 and 3.4 percent more sales in 2020.

“There will be a small, incremental increase in home sales, and the reasoning for that is the magical power of low mortgage rates,” Yun says. “I do believe that we will continue to have favorable mortgage rates for the next 12 months.”

On the economic front, the fundamentals remain solid, but there’s looming unknowns. According to the latest pulse-check by Zillow, economists forecasted a recession in the third quarter of 2020, and believe it’ll curb demand in the housing market.

“The labor market remains in good shape but has recently shown signs of slowing,” says Speakman. “Should job creation slow markedly and/or consumers become bearish on the state of the economy, it’s likely that home-buying would slow.”

In related research, realtor.com® found that if a recession struck, homebuyers may postpone purchasing.

As for a 2008-like meltdown?

“A weaker U.S. economy and/or a rise in rates could easily trigger a bumpy housing market,” Johnson says. “However, there’s no evidence that a slump to the magnitude of last decade’s housing crash is imminent, even under the worst-case scenario.”

“In other cycles, we saw an excess of construction and supply,” Beracha says. “Our cycle is nine years in the making—longer than the average seven—and during those nine years, we did not produce excess supply. Interest rates are low, and we have a strong job market and very low unemployment.”

Still, according to Yun, it’s critical for home-building to pick up.

“One comforting factor that can neutralize an economic downturn is if home-building activity occurs,” Yun says. “When home-building increases, generally, we don’t have an economic recession.”

“I would consider 2020 to be a balanced market,” Beracha says. “Prices remain quite high and inventory is still a bit tight, so buyers can take advantage of lower interest rates and sellers can take advantage of the fact that inventory is still low.”

“At affordable prices, it will still be a seller’s market, and appreciation will be stronger at the lower price points,” Yun says. “The upper-end price projection—as people digest the deductibility of mortgage interest and state and local taxes, including property taxes—is less optimistic. On the lower end, demand will remain solid, given that we have low rates and job creation is continuing.”

“People buy homes because they’re both an investment good and a consumption good,” Johnson says. “Right now, if you find the property and bargain aggressively, and you get a good price, you should move there—and stay for a long period of time.”

The 5 Most Important Technologies for Real Estate in 2019 (and Beyond)

Real estate has always been an industry dependent on technological developments, but the past few years have held some major breakthroughs. Whether you’re a real estate agent looking to sell more homes, a landlord looking to get better tenants, or a prospective homeowner looking for your first real house, the new technology shaping the real estate industry will probably affect your life significantly in 2019 and beyond.

Getty Images

So which technologies and trends are most important to watch in the next few years, and how might they impact the real estate industry as a whole?

Tech Development in Real Estate

These are some of the top tech developments to watch.

1. Buying and selling platforms. First, we’ll see fantastic advancements in the approachability and functionality of real estate buying and selling platforms. The basic idea is to make buying and selling properties easier and more intuitive to the greatest number of people. With easier platforms to navigate, more homeowners will be able to get their houses to market quickly, and more home buyers will be able to find what they’re looking for quickly; overall, that’s going to result in more market activity and better experiences for everyone involved. If you’re selling your home in 2019, you may be able to bypass the need for an agent by using one of these platforms.

2. The blockchain. Blockchain technology has gotten tons of attention for its potential to support cryptocurrency, but in 2019, it may be applied to the real estate world. The possibilities are practically limitless; thanks to tokenization, landlords could hypothetically use the blockchain to sell portions of ownership in their properties. Real estate contracts between buyers and sellers could be done with complete encryption and built-in legitimacy checks. Even property titles could be more securely and more conveniently stored, thanks to blockchain ledgers.

3. Virtual walkthroughs. Virtual reality has been making headlines in practically every industry, but it could really start taking off for real estate in 2019 and beyond. One of the most important steps of buying a property or becoming a tenant somewhere is viewing the property, inside and out–but this can prove difficult if you’re moving to a distant city, or if you’re otherwise unavailable during normal viewing hours. Virtual reality (VR) could easily allow prospective tenants and homebuyers to walk through properties before buying, and it’s going to become more popular and more common in the next few years.

4. Machine learning and ROI calculation. Property investors and real estate agents need to know that they’re spending their time well, and new technology may be able to help them do it. Thanks to the prevalence of big data and machine learning algorithms, real estate professionals will gain more knowledge about the ROI of each of their (and their clients’) transactions. For example, real estate agents will be able to make more accurate predictions for what properties will sell for, how much money their clients will be able to make, and how much they’ll get in commissions. These algorithms can also be used to spot better real estate deals, leading to smarter investments.

5. Big data and personalized recommendations. Personalization has been a game-changer for marketing and advertising (and for many specific industries), but it hasn’t been fully utilized in the real estate industry. Now, real estate agents attempt to personalize their clients’ recommended properties based on personal wants and needs (like number of bedrooms and property location), but in the future, big data will be able to make even more intelligent recommendations. Under the right circumstances, real estate agents and/or homebuying platforms will be able to successfully predict what a homebuyer would want–even if they haven’t explicitly stated it in the past.

Watch for Startups

These high-level trends provide a kind of blueprint for the near future of the real estate industry, but as always, it’s hard to predict exactly how new technologies will develop–and how, exactly, they’ll change the real estate industry. If you’re plugged into the industry, or know you’ll need to change how you buy and sell property, pay attention to the nimble startups that are sure to emerge in the coming years.

They have the power to completely change the industry, so you’ll do well to monitor their development.